By CHRIS MCGANN AND JASON MCBRIDE, P-I REPORTERS

Updated 10:00 pm, Sunday, March 5, 2006

OLYMPIA -- With a budget deal all but wrapped up and the major pieces of the Democrats' agenda passed, this last week of the legislative session is looking more like a victory lap than the normal, breakneck dash to the finish line.

Democrats who control the House, Senate and Governor's Office pushed through new sex-offender sentencing laws, financing for health care and education, an alternative energy plan, changes in the unemployment insurance system, and landmark gay rights legislation.

And although Republicans have blasted the majority for presiding over what they say is the biggest spending increase in state history, Democrats are spinning their supplemental budget as a model of fiscal restraint.

After skimming enough of the $1.6 billion surplus to pay for their new policies and increased caseloads, Democrats will return to their districts and say they set aside about $950 million for future investment in education, health care and state pensions.

With little left on their plate but putting the final touches on the state budget, lawmakers have been casually pondering the possibility of adjourning Wednesday, a day ahead of schedule.

Speaker of the House Frank Chopp, D-Seattle, said the results speak for themselves.

"We have repeatedly shown how we can bring people together on complex issues in a way that carries out our plan of working toward one Washington," Chopp said.

Unemployment insurance changes passed last week are a prime example, he said.

"I could have passed a one-sided 'unemployment insurance' bill," he said. "I had the votes to do that, but I didn't think that was fair to business so I kept working so it would be for the good of both labor and business."

Chopp said his party has proved wrong the notion that Democrats' control of the Capitol would lead to unrestrained spending.

"We've reserved over $900 million in dedicated accounts for the future," he said.

Republicans accused the Democrats of using those accounts to disguise the fact that the money had been appropriated for spending.

"This is the largest increase in spending in the history of Washington state," said Rep. Doug Ericksen, R-Ferndale.

He said all but about $200 million of the $1.6 billion surplus is being spent.

"Let's not call these things saving because they aren't savings," Rep. Gary Alexander, R-Olympia, said of the House budget. "If we were writing this budget, we would actually save $900 million. We wouldn't be talking about games, we wouldn't be talking about playing with so-called artificial reserve accounts, we'd be reducing spending and dealing with the most important priorities."

Republicans made some progress on the modest agenda they outlined at the beginning of the session but Democrats can -- and have -- claimed credit for most of those gains, including farm fuel-tax exemptions, repealing the parking fees at state parks and tougher penalties for sex offenders.

For example, while Republican State Attorney General Rob McKenna proposed the sex-offender legislation, the majority party ran the agenda, with Criminal Justice and Corrections Chairman Al O'Brien, D-Mountlake Terrace, sponsoring the centerpiece bill that would give 25-year sentences to anyone convicted of his first two-strikes sex offense.

House Bill 3277 allows prosecutors to bargain for shorter sentences in cases in which the victim had a relationship with the defendant before the crime was committed. Advocates say children are less likely to testify against a relative or close acquaintance if there's the possibility of a long sentence.

Republicans wanted no exceptions to the 25-year minimum, but McKenna and Democrats argued it was better to put someone behind bars, even if it was for less than 25 years.

Republicans made several attempts at such legislation, including trying to force a floor vote the first day on a 116-page bill that few members had seen.

Impassioned testimony against O'Brien's bill came from Mark Lunsford, the father of a 9-year-old Florida girl who was slain by a registered sex offender.

The tearful testimony of Lunsford and victims of sexual assault pushed the Democrats into tougher legislation, but Republicans say they will work for stricter laws next session.

"If we had a 25-year mandatory sentence," said Ericksen, "we would all feel good about it."

Gig Harbor victims advocate Jim Hines, who stood beside Lunsford as he testified before O'Brien's committee, shared the Republican view and has filed an initiative that would mandate harsher penalties.

Alternative fuel is another agenda item that both parties will claim as their own.

After Gov. Christine Gregoire proposed the alternative-fuel package late last year, lawmakers from both parties rushed to prove their support of Washington farmers and drafted new regulations that would mandate the sale of crop-based fuels.

Rep. Janéa Holmquist, R-Moses Lake, took the lead in the fight to promote ethanol and biodiesel to wean the state off domestic and imported oil. The House ultimately passed a Senate version of Holmquist's legislation.

"It's definitely a victory," said Holmquist. "(Farmers) have been ecstatic."

Senate Bill 6508 mandates fuel dealers to sell 2 percent biodiesel -- grown from seed crops such as canola or mustard seed -- out of their total diesel sales, and 2 percent ethanol -- corn- or wheat-based fuel -- out of total gasoline sales.

The rules would go into effect late in 2008.The Republican leadership argued the mandate would give Washington farmers false hope.

Odessa farmer Fred Fleming, who plans to start a seed-crushing operation with money from the state fund next year, disagrees.